DTI, EU negotiating new tariff deal for electric vehicles, small cars

The Department of Trade and Industry (DTI) is negotiating with the European Union (EU) to reduce import tariffs on electric vehicles (EVs) down from 25% to 18%.

In return, South Africa would like to increase the import duties on vehicles with an engine size smaller than 1 000 cc to 18%, said DTI green industries chief director Gerhard Fourie on Wednesday, speaking at the Electric Vehicle Industry Association (EVIA) conference in Johannesburg.

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Vehicles with an engine size smaller than 1 000 cc are currently imported into South Africa from the EU at 0% duty.

These vehicles have increasingly clinched a larger portion of the budget segment of the new-vehicle market.

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No vehicles with an engine under 1 000 cc are produced in South Africa.

Members of the South African automotive industry, such as BMW Group South Africa, have lobbied government in recent months to reduce the import duties on EVs to 0%, in an effort to stimulate sales of this growing segment of the global market.

The submission is for a 0% duty on the import of EVs for a period of three years and, thereafter, for a 10% import duty to be applied.

There is no outcome on this matter yet.

Fourie said he had been lobbying for an improved dispensation for EVs within South Africa, but that he is hampered by the reality of meagre EV sales figures of around 50 units a year.

Government was also protective of its largest manufacturing industry – the auto industry – which hosted around 112 000 jobs.

Fourie said he was aware of some members of the local automotive industry feeling that EVs were getting the short end of the stick under the current tariff regime.

“Tariffs are blunt instruments. There are always winners and losers.”

Fourie emphasised, however, that vehicle manufacturers wishing to push the local sales of EVs should continue to engage government, as “discussions are never closed”.

He added that government’s automotive support programme, the Automotive Production and Development Programme (APDP), did not discriminate against the manufacturing of EVs. He said the APDP would provide the same support to EVs as it did to internal combustion engine vehicles.

He said government was aware that the auto industry faced current and future pressure relating to EVs, especially in terms of component exports. South Africa’s component exports were all largely linked to internal combustion engines, and included components such as engine parts and catalytic converters.